Question 1

-In the above figure, if the firm increases its output from Q1 to Q2, it will

Accepted Answer

A)  reduce its marginal revenue. 
B)  increase its marginal revenue. 
C)  decrease its profit. 
D)  increase its profit. 
A)  reduce its marginal revenue. 
B)  increase its marginal revenue. 
C)  decrease its profit. 
D)  increase its profit.

Question 2

A perfectly competitive firm's short-run shutdown point is the level of output at which

Accepted Answer

A)  price equals average total cost. 
B)  price equals average fixed cost. 
C)  price equals the minimum average variable cost. 
D)  price is above the minimum average total cost but below the minimum average fixed cost. 
A)  price equals average total cost. 
B)  price equals average fixed cost. 
C)  price equals the minimum average variable cost. 
D)  price is above the minimum average total cost but below the minimum average fixed cost.

Question 3

The firm's short run supply curve is equal to the

Accepted Answer

A)  entire marginal cost curve. 
B)  marginal cost curve above the AVC curve. 
C)  marginal cost curve above the ATC curve. 
D)  marginal cost curve above the AFC curve. 
A)  entire marginal cost curve. 
B)  marginal cost curve above the AVC curve. 
C)  marginal cost curve above the ATC curve. 
D)  marginal cost curve above the AFC curve.

Question 4

-In the long-run equilibrium, perfectly competitive firms make zero economic profit because of

Accepted Answer

A)  government regulations. 
B)  the ability of firms to enter and exit. 
C)  inefficient production processes. 
D)  high fixed costs. 
A)  government regulations. 
B)  the ability of firms to enter and exit. 
C)  inefficient production processes. 
D)  high fixed costs.

Question 5

-In the above figure, the perfectly competitive firm's shutdown point is at a price of

Accepted Answer

A)  $4 per unit. 
B)  $8 per unit. 
C)  $12 per unit. 
D)  $16 per unit. 
A)  $4 per unit. 
B)  $8 per unit. 
C)  $12 per unit. 
D)  $16 per unit.

Question 6

-The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output

Accepted Answer

A)  equals $0.50. 
B)  equals $1.00. 
C)  equals $2.00. 
D)  cannot be determined. 
A)  equals $0.50. 
B)  equals $1.00. 
C)  equals $2.00. 
D)  cannot be determined.

Question 7

-Brennan's Farm produces and sells milk. The market for milk is perfectly competitive. The market price of milk is $2.50 per gallon. The relationship between the farm's output and total costs is shown in the table above.
a) Draw Brennan's average variable, average total, and marginal cost curves.
b) Use your graphs to find Brennan's profit-maximizing output.
c) If Brennan maximizes his profit, how much profit does he make?
d) Should Brennan stay in business? Will other farms with costs the same as Brennan's enter the milk market? Explain.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& a) Brennan's cost schedules are shown

Question 8

Perfectly competitive firms are price takers.

Accepted Answer

A) True 
 B)False

Question 9

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

Accepted Answer

A)  increases the number of firms in the market. 
B)  increases the economic profits of existing firms in the market. 
C)  has no effect on the price. 
D)  causes more firms to shut down. 
A)  increases the number of firms in the market. 
B)  increases the economic profits of existing firms in the market. 
C)  has no effect on the price. 
D)  causes more firms to shut down.

Question 10

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will ________. Some firms will ________ the industry, and the industry supply curve will shift ________.

Accepted Answer

A)  make economic an profit; enter; rightward 
B)  make zero economic profit; exit; leftward 
C)  incur economic losses; exit; rightward 
D)  incur economic losses; exit; leftward 
A)  make economic an profit; enter; rightward 
B)  make zero economic profit; exit; leftward 
C)  incur economic losses; exit; rightward 
D)  incur economic losses; exit; leftward

Question 11

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

Accepted Answer

A) True 
 B)False

Question 12

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry

Accepted Answer

A)  equals $0.50. 
B)  equals $1.00. 
C)  equals $2.00. 
D)  cannot be determined. 
A)  equals $0.50. 
B)  equals $1.00. 
C)  equals $2.00. 
D)  cannot be determined.

Question 13

-In the above figure, if the price is $16, a profit-maximizing perfectly competitive firm will

Accepted Answer

A)  produce 50 units. 
B)  produce 35 units. 
C)  produce 10 units. 
D)  choose not to produce. 
A)  produce 50 units. 
B)  produce 35 units. 
C)  produce 10 units. 
D)  choose not to produce.

Question 14

-The above figure illustrates a perfectly competitive wheat farmer.
a) What will be the firm's profit-maximizing price and output?
b) When the farmer produces 25,000 bushels of wheat, the difference between the firm's average total cost and the price is at its maximum. Explain why this amount of wheat either is or is not the profit-maximizing quantity.

Accepted Answer

a) The firm will maximize its profits by

Question 15

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8 and the firm does not shut down, the firm's output in the short run

Accepted Answer

A)  will be 0. 
B)  will be between 0 and 10. 
C)  will be 10 or higher. 
D)  cannot be determined without more information. 
A)  will be 0. 
B)  will be between 0 and 10. 
C)  will be 10 or higher. 
D)  cannot be determined without more information.

Question 16

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. Assuming there are no changes in technology, in the long run the lowest possible price for corn is ________ per bushel.

Accepted Answer

A)  $2.50 
B)  $2.00 
C)  $3.00 
D)  $3.50 
A)  $2.50 
B)  $2.00 
C)  $3.00 
D)  $3.50

Question 17

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price ________ and the economic loss of the surviving firms ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases

Question 18

-Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $24. The marginal cost of producing a second hat is $26 and the marginal cost of producing a third hat is $28. The market price of a hat is $26. To maximize profit, Tammy produces ________ per day.

Accepted Answer

A)  1 hat 
B)  3 hats 
C)  2 hats 
D)  as many hats as possible 
A)  1 hat 
B)  3 hats 
C)  2 hats 
D)  as many hats as possible

Question 19

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is

Accepted Answer

A)  $12. 
B)  $17. 
C)  $8. 
D)  $2. 
A)  $12. 
B)  $17. 
C)  $8. 
D)  $2.

Question 20

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit?

Accepted Answer

A)  $4 per unit. 
B)  $10 per unit. 
C)  $12 per unit. 
D)  $16 per unit. 
A)  $4 per unit. 
B)  $10 per unit. 
C)  $12 per unit. 
D)  $16 per unit.

-In the above figure, if the firm increases its output from Q₁ to Q₂, it will

A perfectly competitive firm's short-run shutdown point is the level of output at which

The firm's short run supply curve is equal to the

-In the long-run equilibrium, perfectly competitive firms make zero economic profit because of

-In the above figure, the perfectly competitive firm's shutdown point is at a price of

-The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output

Perfectly competitive firms are price takers.

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will . Some firms will the industry, and the industry supply curve will shift .

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry

-In the above figure, if the price is $16, a profit-maximizing perfectly competitive firm will

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8 and the firm does not shut down, the firm's output in the short run

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. Assuming there are no changes in technology, in the long run the lowest possible price for corn is ________ per bushel.

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price and the economic loss of the surviving firms .

-Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $24. The marginal cost of producing a second hat is $26 and the marginal cost of producing a third hat is $28. The market price of a hat is $26. To maximize profit, Tammy produces ________ per day.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 12: Perfect Competition

-In the above figure, if the firm increases its output from Q1 to Q2, it will

A perfectly competitive firm's short-run shutdown point is the level of output at which

The firm's short run supply curve is equal to the

-In the long-run equilibrium, perfectly competitive firms make zero economic profit because of

-In the above figure, the perfectly competitive firm's shutdown point is at a price of

-The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output

Perfectly competitive firms are price takers.

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will ________. Some firms will ________ the industry, and the industry supply curve will shift ________.

In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost.

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry

-In the above figure, if the price is $16, a profit-maximizing perfectly competitive firm will

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8 and the firm does not shut down, the firm's output in the short run

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. Assuming there are no changes in technology, in the long run the lowest possible price for corn is ________ per bushel.

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price ________ and the economic loss of the surviving firms ________.

-Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $24. The marginal cost of producing a second hat is $26 and the marginal cost of producing a third hat is $28. The market price of a hat is $26. To maximize profit, Tammy produces ________ per day.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-In the above figure, if the firm increases its output from Q₁ to Q₂, it will

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will . Some firms will the industry, and the industry supply curve will shift .

Suppose firms in a perfectly competitive market are incurring an economic loss. As firms exit, the price and the economic loss of the surviving firms .